Legal Analysis Of Control Protocol Under VIE Structure

Along with the enthusiasm for split and regression of the VIE structure, people focus on the issue of control protocol again.In this structure, control protocol possesses some defects such as blurry position, the legal effect and breach remedy indeterminacy, which are the main constraint on bVIE enterprises’ development. Discussing the typical cases and relevant laws, this text redefines the nature of the protocol and makes a further illustration of its legal norm. Then, according to Article 52 in Contact Law and the revising Foreign Investment Law of China, analyzing related cases and arbitral awards, this article points out the recent situation of the juridical practice and presents some views and opinions. The last part is a discussion about the default risk of control protocol, making recommendations to the breach remedy and well-functioning laws in line with the wave of the VIE structure. This article also makes it clear that we should accept the validity of control protocol and identifies its legal status and effects, minimizing the gray area of the VIE structure and promoting its sound development facilitates China’s capital market to a further improvement and development, which play an active role in VIE enterprises which are listing the three new board or going public overseas.